Texas Data Centers Face Water Reckoning Under Governor-Elect Hinojosa

Texas data centers could absorb as much as 9% of the state's water by 2040, up from less than 1% today — and the state's draft water plan doesn't project that demand at all, according to researchers at the University of Texas-Austin.

That figure lands at a volatile moment. On November 3, Democrat Gina Hinojosa defeated Governor Greg Abbott, becoming the first challenger to unseat a sitting Texas governor since 1994. Hinojosa campaigned on an immediate moratorium on new data center construction, and her win puts a hard question mark over one of the state's hottest growth industries.

Data center infrastructure turned Texas into an epicenter of the AI boom. The Stargate Oracle facility in Abilene has become a symbol of that buildout. But voters, in electing Hinojosa, may have changed the rules of the road for developers who bet the state's low-cost power and land would keep flowing.

Why water, not just power, is the flashpoint

Energy dominates the debate over data centers, but water is becoming just as contentious in a state where supplies are dwindling amid a booming population. The tension is already playing out locally. This summer, protesters showed up at a Fort Worth zoning hearing to demand a moratorium on data center development — a moratorium the city council is now weighing.

The numbers explain the anxiety. A jump from under 1% of statewide water use to a potential 9% by 2040 would make the sector one of the fastest-growing consumers in Texas, even as the state's own planning documents leave that demand entirely unmodeled.

In plain terms: Texas is arguing about data center water it hasn't even counted yet.

What changed for builders in 2025

"While demand is still constant in Texas, what changed this year was the permission," Kevin Gast, founder and CEO of VVater, an Austin startup that treats water with electricity instead of chemicals, tells Inc.

That single shift — from open-ended permission to political scrutiny — reframes every project in the pipeline. Hinojosa's upset victory means the governor's mansion now holds a politician who explicitly campaigned on halting new construction.

"Whether the next phase is a pause, a formal moratorium, or new legislation, this is the new baseline for building in Texas," Gast says.

Not every project faces the same risk. The developments that will suffer, according to Gast, are "the ones that treat water and power as someone else's problem." Projects that bring their own resource solutions — treatment, recycling, efficiency — are the ones positioned to clear the new bar.

The takeaway for developers is blunt: resource self-sufficiency is now a permitting strategy, not an optional upgrade.

What happens next

Three things are moving at once. Hinojosa takes office with a mandate to freeze new construction. Fort Worth's city council weighs its own moratorium. And Texas regulators must decide whether to fold data center demand into a water plan that currently ignores it.

The likely survivors of the squeeze are the projects that internalize water and power costs from day one — because in post-Abbott Texas, treating those resources as externalities is the fastest route to a rejected application.

The next phase of the state's AI boom, in other words, will be decided less by compute demand than by who controls the water.